India: NMDC hikes iron ore price upto 5%, prices climb to two-years high

India’s state-owned iron ore miner – National Mineral Development Corporation (NMDC) has increased prices by 4-5% for Nov’20, sources have reported SteelMint. The prices for Baila lump and fines have been increased by INR 150/t and that of DR CLO by INR 170/t. With the recent hike announced, NMDC prices have hit 2-year high levels.

The revised prices for Baila fines (Fe 64%) stands at INR 3,310/t, Baila lump (Fe 65.5%) is assessed at INR 3,600/t and DR CLO (Fe 67%) at INR 4,180/t. NMDC sets prices on a free-on-road (FoR) basis and does not include royalty and taxes.

Domestic iron ore prices in India continue to remain on the higher side amid scarcity of high-grade ore in the Odisha’s merchant market. Towards the end of last week miners like Rungta, Essel Mining raised fines offers by INR 200-250/t.

Reasons behind hike in prices –

• Iron ore production in Odisha lagging behind – The Odisha government “successfully”auctioned16 iron ore mines earlier this year. The auctions saw active and aggressive participation from the industry fetching premiums as high as 150%. However, as on Sep’20 only 7, of the 16 mines auctioned, have been able to start production. SteelMint expects a shortfall of ~6 mnt iron ore in FY21 against FY20 in the state of Odisha.
• OMC’s iron ore fines auction continue to receive higher bids – Odisha’s state-owned miner- Odisha Mining Corporation (OMC) had scheduled an auction for 545,000 t iron ore fines yesterday (03 Nov’20). The auction received overwhelming response with the entire quantity being booked with hike in bids upto INR 1,900/t ($26).

• Raipur pellet index increased sharply- Raipur based pellet index (PELLEX) has increased sharply around INR 950/t m-o-m to INR 9,350/t (DAP, Raipur) yesterday against INR 8,400/t (DAP, Raipur) a month ago. Maintenance shutdown at few pellet manufacturing plants have kept supplies tight.
• Hike in sponge iron prices – Pellet sponge (P-DRI) prices in Raipur also increased around INR 3,000/t m-o-m to INR 22,300/t exw Raipur.
•  Mills raised finished steel prices for Nov – Indian steel mills have announced a steep hike in list prices of HRC and CRC prices for Nov deliveries. Prices have increased by INR 1,000-1,250/t. Improved domestic sales, robust auto demand, and higher input cost compelled steel mills to increase prices for Nov deliveries.